Futures are down this morning. The SPY is currently sitting at 324.98 in the premarket and has been moving up in the last 30 minutes from 324. In pre-market since yesterday we saw a big move down with SPY bouncing off support at 323.75 and resistance at 325.30. In the premarket charts at the moment we see that the 10 moving average line is very close to the 20 moving average lines on the 5 the 10 and 15-minute charts though all have crossed a few times. Finally, volume this morning is greater than at this time in the past two days.
The SPY seems to be headed for a gap down here of 1.5 – 2 points. With that, we will open below the 3 days moving average. With this Gap down, it seems concerns about the coronavirus have overshadowed the earnings and news. So I am looking for a drop at first as people await the meeting of the world health organize. If for some reason it pops, I will wait for a reversal off a resistance line confirmed by volume and a bearish candle or if it just moves sides ways I’ll look for selling volume to confirm my decision.
In order for this trading plan to be in play SPY must remain trading below that key resistance level near $325.50. As a reminder, I encourage you, if you do jump in, manage your stop loss according to your tolerance. Finally, know that because of recent volatility, these options will be more expensive than usual.
Resistance: 325.02, 325.20, 325.37